Section 301 tariff puts Indian jewellery exports at risk

Key takeaways

• The new US charge could make Indian gems and jewellery dearer for American buyers.
• The US is India’s biggest overseas market for cut and polished diamonds and jewellery.
• Exporters may absorb some costs first, but smaller firms have less room to do so.
• Buyers could shift orders to countries that face lower import charges.

The Section 301 tariff puts fresh pressure on Indian gems and jewellery sold in the US. A Section 301 tariff is a US trade charge. It lets Washington add duties when it says another country uses unfair trade practices. The new cost may hurt orders from India’s largest jewellery market.

What is the Section 301 tariff and why does it matter?

The US uses Section 301 of its Trade Act to investigate trade practices. A tariff is a tax paid when goods enter a country. Importers usually pay it first, but they may ask sellers to cut prices.

The reported new Section 301 tariff adds to the strain facing Indian exporters. Gems and jewellery are often bought for weddings, gifts, and holidays. So a small jump in price can push a shopper toward a cheaper ring or necklace.

Indian companies make many parts of this trade chain. They cut diamonds, set stones, cast gold, and ship finished pieces. That means a weaker US order book can reach workers in Surat, Mumbai and other jewellery hubs.

How big is India’s exposure to the US market?

India exported about $28.5 billion of gems and jewellery in the financial year ended March 2025, according to the Gem and Jewellery Export Promotion Council. The US bought roughly $9.9 billion of that total. In simple terms, it accounted for close to $1 in every $3 earned abroad by the sector.

That reliance makes the Section 301 tariff more than a narrow trade issue. A buyer in New York can source some products from other countries. But India remains a major centre for diamond cutting and detailed gold work.

India gems and jewellery exports, FY25Total exports: $28.5bnExports to US: $9.9bnSource: GJEPC; bars show relative value

FY25 measure	Value	Why it matters
India’s gems and jewellery exports	$28.5 billion	Shows the sector’s size
Exports to the US	About $9.9 billion	Shows US dependence
US share	About 35%	Explains the tariff risk

Why could the Section 301 tariff hurt orders?

Price is the first problem. If a US importer pays more at the border, it can raise the shop price. It can also demand a discount from its Indian supplier.

Exporters may cut their own margin to keep a customer. A margin is the money left after a business pays its costs. But that choice becomes hard when gold prices, wages, freight and finance costs are already high.

A $1,000 jewellery shipment is easy to picture. A 10% duty adds $100 before the importer’s own costs. The final store price may rise by more than $100, since shops also add their usual mark-up.

The Section 301 tariff could squeeze Indian jewellery makers from both sides: US buyers may seek lower prices, while Indian firms still must pay for gold, stones and skilled work.

What can Indian jewellery exporters do now?

Large brands may share the extra cost with US buyers for a while. They may also focus on designs that are hard to replace. A hand-made bridal set, for example, gives a buyer fewer easy alternatives than a plain chain.

Smaller exporters face a tougher test. They often depend on a few overseas buyers and have less cash to offer discounts. The government and trade bodies may seek clarity from Washington and press for talks.

Firms can also look for more customers in West Asia, Europe and Asia. That takes time, though. Building trust with a new jewellery buyer is not like changing a grocery supplier.

Indian businesses are already watching wider US trade policy closely. Read our report on the US tariff rate falling to 10% for the broader trade backdrop.

What should buyers and workers watch next?

The key question is whether US importers keep placing the same volume of orders. Export data in the next few months will show if demand has slowed. A fall in orders may first hit factories that work on thin profits.

Workers should also watch for shifts in diamond cutting and jewellery making hours. The industry supports a large network of cutters, polishers, designers, packers and small workshops. Even a modest drop in US sales can spread through that network.

The US Trade Representative publishes notices and details of trade actions on its Section 301 investigations page. Exporters will need those details because product codes and start dates decide who actually pays.

FAQs

How does the Section 301 tariff affect Indian exporters?

It can raise the cost of goods entering the US. Buyers may then cut orders, ask Indian sellers for discounts, or raise retail prices.

What goods are most exposed?

Cut and polished diamonds, gold jewellery, silver jewellery and finished gem-studded pieces may face the greatest concern. The exact impact depends on the US product code.

Why is the US market so important for Indian jewellery?

The US buys about $9.9 billion of India’s annual gems and jewellery exports. That is about 35% of the sector’s overseas sales.